Executive Pay Too High? Hire Foreign CEOs

Linda Grant makes the case that executive compensation levels in the United States are high relative to international standards, “Shareholders Balk at Shift in Executive Compensation Plans” (April 12).

Grant fails to consider, however, a way to deal with this issue for which there is a well established precedent. When compensation levels have become too high, many U.S. companies have simply moved their operations offshore.

Numerous plants, data processing activities, and even R&D; facilities have been moved to Asia, South America and Europe over the past decades. Senior management, in most cases, has not hesitated to make these moves when they were in the best interest of the company. It may now be time to turn the tables and use this model for reducing executive compensation levels.

My proposal is that we move the executive offices of corporations offshore and take advantage of the tremendous savings that are available by hiring Asian and European executives to manage U.S. corporations. They know how to manage large organizations, and considerable savings could be accomplished.

Is this proposal too far out to take seriously? Maybe, but some U.S. companies have made a small step in this direction by locating headquarters for some of their product lines offshore. Hewlett-Packard, for example, has a headquarters for its personal computer business in Europe.

Of course, we don’t have to move corporate headquarters, we can simply recruit senior executives to the United States. This might be the least disruptive approach to take, and be more cost-effective than moving the corporate headquarters operations overseas.

Will corporations act in order to reduce the cost of executive labor? If the decision involved a plant, I have no question that in most cases they would decide to move overseas. I am less confident that they will make the same decision with respect to executive jobs.

EDWARD E. LAWLER III

Los Angeles

The writer is director of the Center for Effective Organizations at USC’s Graduate School of Business .